People walk and bike past the US Capitol in Washington, DC on May 11, 2023.
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WASHINGTON — The Congressional Budget Office said Friday that post-June 15 tax receipts and emergency measures “will likely allow the government to continue its funding operations at least through the end of July.”
Otherwise, the updated forecast reiterated the CBO’s earlier uncertainty about the debt ceiling in the first weeks of June. Although mid-June tax receipts could ease the pressure on the Treasury through July, there is still a risk of a default in the first weeks of June, the government’s key forecaster said.
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“If the debt ceiling remains unchanged, there is a significant risk that at some point in the first two weeks of June the government will be unable to meet all of its commitments,” the CBO report said.
The new report comes as the White House and Congress leaders postponed a scheduled Friday meeting to resume negotiations, citing little progress has been made on an agreement to cut spending and raise the debt ceiling.
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“The extent to which the Treasury will be able to fund ongoing government operations will remain uncertain throughout May, even if the Treasury finally runs out of funds in early June. This uncertainty is due to the timing and level of revenue collection and spending throughout the year.” “The intervening weeks could differ from the CBO’s forecast,” the latest report reads.
The CBO also released an updated forecast of the federal budget deficit for 2023, increasing it to $1.5 trillion.
The office warned that there was still “great uncertainty” about the deficit figure, due in part to an expected Supreme Court ruling on President Joe Biden’s student loan forgiveness plan.
Legal experts told CNBC that given the court’s conservative majority, the country’s highest court is likely to reject the $400 billion debt relief plan.
If that happens, the administration would likely book the money it set aside for forgiveness last year as spending cuts this year, the CBO reported.
The CBO is a bipartisan federal agency that provides objective fiscal and economic data to Congress, typically to inform legislation.
Debt ceiling negotiations were delayed less than a day before Biden met with House Speaker Kevin McCarthy, R-Calif., Senate Minority Leader Mitch McConnell, R-Ky., Senate Majority Leader Chuck Schumer, DN.Y., should compose. and House Minority Leader Hakeem Jeffries, DN.Y.
This meeting was to be the second this week, after a Tuesday meeting yielded no significant developments.
As of Friday, it was unclear what impact, if any, the new report would have on ongoing staff-level talks between advisers to the four congressional leaders and White House liaisons.
As both the House and Senate prepared to leave for the weekend on Thursday, McCarthy said he had seen no “seriousness” from the White House about a possible deal. “It seems like they want a default rather than a deal,” the California Republican told reporters at the Capitol.
Democrats also appeared to be adamant, as Schumer indicated in a letter to his group on Friday, saying staff-level talks would continue in the coming days.
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But even as advisers worked to find common ground, Schumer said Democratic senators would continue to highlight “the devastating impact” of federal budget cuts, which are part of a bill passed by Republicans in the House of Representatives last month.
Key to the partisan standoff is the White House’s insistence that Congress vote unconditionally to raise the debt limit, and House Republicans’ demand that any debt limit increase be accompanied by sweeping cuts in federal spending and new labor requirements for social welfare programs security must go hand in hand.
Failure to raise the debt ceiling before the US runs out of available cash and immediate action is taken would result in “economic disaster,” Treasury Secretary Janet Yellen said on Monday.
“That could create financial chaos, it would drastically reduce the amount of spending and mean that Social Security recipients, veterans and people who are counting on money from the government that’s owed to them, contractors, we just wouldn’t have enough money around.” paying the bills,” Yellen told CNBC’s Closing Bell: Overtime.